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When Making a Business with a Friend, ask these questions first

Friends come and go in our lives, sometimes, they stay for a day and other times their there for life but when it comes to the pitfalls of starting a business, that can seem when everything about the friendship is tested. Starting a business is no easy matter and should be taken seriously every step of the way, and so you should also look at a partnership with a friend in the same light.

Your friend might always be there to cheer you up on days when your down but what about when the numbers are not looking so good and part of the blame falls on them, how will that talk with work out? Not only that, but how will it affect your relationship? Before starting any business you need to ask yourself important questions and once your asked yourself some personal questions like

Where will I get funding for my idea?

How many hours will I need to work, besides the hours at my regular job, before it takes off?

Once you have an idea of how you plan to handle the business now you need to consider questions when bringing on someone else to help run a business with you. These questions help make you aware of any dangers that will happen, and they will, between the you and your friend.

Questions to Ask about having a friend as a business Partner
1. How well do I know my friend?
If you really think about this question carefully it might come to surprise you that you only know your friend when you go out for drinks on the weekend, having never seen them really at work when they are working on projects that require late night hours and deadlines. If you find that you only see your friend during times of social engagement then you might need to see what they are like when they are working. You have to be able to place all your trust in them to know that if they go to a presentation for the both of you, then you can trust they will put the company’s interest first. If you have any hesitating factors about having a friend as a business partner then it might be best to try it as a trial thing or not at all.

2. What does your friend bring to the business?
This is an easy one to understand, are they a partner because they are better at something than you are or are they there because they are fun to hangout with? You need to know what skills they offer to the company that you fall short on, otherwise what are they really there for? If they are a partner only for moral support then you don’t need to bring them on as a partner, you can just meet up for drinks after work on the weekend and not have to worry about paying them.

3. What is their background in business and personal?
Often times friends will start a business only for one friend to find out that, when applying for loans, their friend has bad credit which can hurt their chance of getting a loan. Another problem that happens a lot is that another friend is having marriage problems and the stress is affecting their performance in the business. If someone was to ask you, “how well do you know your friend, both professional and personally?” if you are not able to answer every detail about them then that should be a red flag to know that you need to rethink the partnership. You don’t want to find out one night while working on the books that your friend has decided to move after they get married, and you never knew they were even seeing anyone.

Taking Things Slow in the Beginning
These are a few questions to consider when thinking about starting any kind of business with a friend. Most people think it would be fun to start a business with a friend because they saw it their favorite TV show or movie and it looked so easy. The reality is that starting any business is hard and it only gets harder when another person is there to accept 50% responsibility but also someone who controls 50% of the company. The best thing to do in the beginning stages is to lay all the cards out on the table, put personal feelings aside and have a lawyer write up an agreement and have both sign it that way everything is handled. IF you rely on a handshake and verbal agreement you will only be setting yourself up for loads of problems down the road.

More questions to ask your friend before starting a partnership